With extreme social distancing requirements in place across Iowa and the United States, it is clear that COVID-19 will have an impact on our lives for weeks to come. Cities, schools, and universities alike have cancelled scheduled events — and more and more cancellations are still to come. But what if your organization has booked a venue, caterer, and other services for your event? How should you go about terminating those contracts?
Before you do anything, look at when your event is scheduled and the most recent government restrictions in place. On March 17, 2020, Governor Kim Reynolds issued a Proclamation of Disaster Emergency that, among many other restrictions, prohibited all gatherings and events of more than 10 people at all locations and venues in the State of Iowa through March 31, 2020. If your event is scheduled before March 31, 2020, then you’ll be able to easily terminate any contracts in place for the event as it is now impossible for the event to occur – regardless of whether such contracts have force majeure provisions. Reach out to your vendors as soon as possible to confirm that the contract is terminated for your scheduled event. Because the termination was beyond your control, you most likely should not be liable for any cancellation fees or other liabilities.
What if your event is scheduled after March 31, 2020? The Centers for Disease Control and Prevention (CDC) has advised against gatherings of 50 or more people through at least mid-May, but this isn’t an enforceable restriction yet. It’s possible that the Governor’s Proclamation may be extended beyond the end of the month, but until then, you’ll need to check the terms of your contracts before you cancel them.
First, determine if your contract has a force majeure provision — this will govern whether you can terminate the contract without liability. Next, read the force majeure provision to determine whether COVID-19 is a force majeure event that would allow you to terminate the contract. Read the provision carefully — some force majeure provisions only allow one side to terminate, and some strictly define “force majeure.” If you aren’t sure, reach out to a BrownWinick attorney who can help you interpret the force majeure provision.
If your contract does not have a force majeure provision, you’re not entirely out of luck. Common law does allow a contract to be terminated (often without liability, but not always) if the contract will be impossible or impractical to perform. While it may not be impossible to perform the contract without further government restrictions in place, with the CDC’s social distancing recommendations and the World Health Organization’s global pandemic declaration, it may very well be impractical for your event to move forward and the contract to be performed. Every situation is different, so speak with a BrownWinick attorney if you need assistance determining whether you can terminate your contract.
Last, remember that timing is key — if your event is in late May or the summer months, you should hold off a few weeks or months before cancelling. While health officials are warning that we may need to social distance into the summer, currently there are no recommendations past mid-May. The further out you are from your event, the more likely it is that COVID-19 may not be a force majeure on the date of your event. So until things come more into focus, stay calm, encourage social distancing, and enjoy wearing sweat pants if you are working from home!